So, how many of the people reading this blog know about refinancing? Refinancing can be defined as the substitute of a present obligation for a debt with another obligation of debt which is under different terms of finance. The conditions and terms of refinancing differ widely from country to country, province to province and/or state to state and are based on various factors of the economy like inherited risk, future risk, stability of the politics of a country,the stability of the currency, regulations of banking, worthiness of the credit of the borrower and the nation’s credit rating. This is the economic definition of refinancing. The most commonly used formats of refinancing is to take a mortgage on the primary residence as payment of the loan.
Now, on to the main topic of the blog – how would you go about refinancing your credit card debts and become a financial Jedi? First of all, you need to know that there are two methods of refinancing the debts of a credit card – the first method is the direct modification of the debt terms and the second method is to let a new lender takes over your debt. The new lender generally shifts the balance to a new card. You also choose to take up a new installment loan so that you can refinance your finances. The process of refinancing your credit card debts is quite complicated. One must enter the process of refinancing with care, if you want to reap its benefits. Otherwise, you will stick in a financial doldrums.
The process of refinancing is as follows –
- Make a list of your debts – Firstly, find out how much debt you actually have. Do you have a car loan or an appliance loan or student loans? Make a list of all the loans that you have included your credit card loans. Frequently, you will find that you will reap the biggest benefits that can be gained from refinancing is by making an inventory of all your debts and if you can merge your debts. Make a statement as to which debts you want to refinance and which debts are already well on their way to be paid off
- Find your ability to pay debts off – If you want your refinancing schemes to work for a long time, then make a budget. Make the budget by consulting the bills of the previous six months and make the list of all your incomes and expenses. Once you have this number, find out how long will it take for you to pay off your debts without any kind of interest rates and then find out how long will it take for you to pay off your loans with a range of interest rates are applied
- Discuss the consequences of lump sum payment – You might face some penalties if you pay off your present debt in one lump sum amount. Your first credit card contract should state all these consequences. Discuss it with your present financial lender and learn about the consequences or fees that you might face. These fees need to be a part of your expenses while you are refinancing your credit card debts
- Choose a lender with a better substitute – Based on the account statements that you have created and the amount of loans that you need to pay off, you need to find the proper lender. Start your search on the web and get to know some online lenders who will offer you quick quotes without much work from your end. Take the help of the banks and lenders and get to know about the best rates of interest. If you find the appropriate lender you are looking for, then make sure that he is legit. Check his credit rating and reviews
- Make consideration of all factors – Always keep in mind that the rate of interest should not be the only factor with which you will decide refinancing. You have to consider all other factors which are involved. You may create a list which will include everything that you require and use it to compare lenders and find the best one possible.
Here are some tips that you can keep in mind and work your way towards becoming a financial Jedi –
- There is absolutely no connection between how much time you spend at your office and how much work you give and knowledge you gain
- Read up only the things that are important and use the knowledge you have gained actively
- Make tabs on what you are reading
- If you can’t get into an MBA program, then take up CFA instead
- If you do take up CFA, try to pass the exams at one go and don’t linger
- Before you head to work for a company, find out the work environment of the company
- Try to look at financial topics from the perspective of the person who is presenting the topic
- Get to know how well you will perform in a financial environment and what the highest amount of loan that you can shoulder upon yourself
- Learn to control your emotions regarding financial matters and also around the office environment
- Get the proper amount of rest and stay healthy at all times
- At all times, behave like a good human being.
So, thus the process of refinancing and how you can benefit from it. The tips given just above are provided so that you can become a financial Jedi and manage your finances properly. So, may the financial force be with you!